Half Yearly Report

Results for the period ended 31 December 2012

The board of Leaf Clean Energy Company ("Leaf" or "the Company") are pleased to announce the Company's results for the period ended 31 December 2012.

Highlights of the period are:

·; NAV per share for the Leaf portfolio was 142.97 cents or 88.35 pence at US$1.6181 to the GBP1 (30 June 2012: 141.52 cents).

·; US$4.0 million gain on revaluation in the carrying value of the portfolio companies.

·; On 20 July 2012 Leaf made a US$5 million investment in preferred stock of Lehigh Technologies, Inc.

·; Leaf made an additional US$11.9 million of direct equity and debt investments into existing portfolio businesses.

For further information, please contact: 

Bran Keogh +1-202-289-7881

Leaf Clean Energy Company

Ivonne Cantu +44 (0) 207 397 8900 

Cenkos Securities plc 

CHAIRMAN'S STATEMENT

July through December 2012 was a period of successful consolidation for Leaf Clean Energy Company ("Leaf"). With the market remaining weak, the board and management focused on enhancing the value of our investees by providing the operational and financial support they needed to help them advance their business plans, while aggressively managing costs. As a result, we believe our portfolio of companies is strongly positioned for eventual realisations at optimal valuations once the acquisition and IPO markets improve.

Current Market Conditions 

A combination of adverse factors dampened 2012 global investment in clean energy, resulting in an 11% decline from 2011. These included: U.S. and European policy uncertainty; low U.S. power prices due to abundant, low-cost shale gas; over-capacity and under-pricing in the global solar PV market; and depressed pricing for quoted clean energy stocks. However, there were signs late in the interim period that clean energy markets may have been through the worst with Q4 global clean energy investment up 20% as compared to Q3. While the short-term outlook remains challenging, we see brighter prospects on the horizon.

In the United States, where most of our portfolio is concentrated, there was continued flight from clean energy among venture capital and private equity during the reporting period, and public markets remain depressed. However, we see conditions slowly improving, aided by a more welcoming political climate. The one-year extension of the production tax credit (PTC) passed in late December by Congress is a welcome boost for the wind industry. White House policy also seems headed in a favourable direction.

Portfolio Performance

Despite the market's on-going volatility, Leaf's portfolio continues to perform in line with expectations. During the past six months our companies strengthened their management teams, optimized operations, increased intellectual property, and successfully pursued commercial opportunities around the world.

Leaf's efforts in its prior fiscal year to evaluate strategic high-quality investment opportunities resulted in one new investment during the interim period. On 20 July 2012, we made a new US$5 million investment in preferred stock of Lehigh Technologies, Inc. ("Lehigh"), a promising international green materials company.

Highlights of July-December 2012 included the following:

·; SkyFuel, Inc. ("SkyFuel") won the contract for Canada's first concentrating solar power (CSP) project. SkyFuel will supply high performance parabolic trough solar collectors to Medicine Hat in Alberta, offsetting fuel consumption at the city's combined cycle gas power plant and avoiding the equivalent of 600 metric tons of carbon dioxide emissions per year.

·; MaxWest Environmental Systems, Inc. ("MaxWest") appointed board member and interim CEO, Steven D. Winchester, as chief executive officer. Under his leadership, MaxWest launched a successful start-up of its innovative and proprietary second-generation gasification technology, which delivers improved performance for customers.

·; Invenergy Wind, LLC ("Invenergy") closed a US$500 million investment by Caisse de dépôt et placement du Québec (CDPQ) in operating wind farms in the United States and Canada that generate a combined 1,500 megawatts of green power.

·; Lehigh announced two new strategic partnerships that will help accelerate the company's expansion into the tire, consumer and industrial plastics and coatings industries in Europe and Latin America.

Market Outlook

The fundamental drivers of renewable energy and clean energy technologies remain favourable, making a near term market rebound likely. The world's governments recognize the need to address climate change, promote energy independence, and find ways to help emerging countries accommodate their pressing energy needs in cleaner ways. All these imperatives point to clean energy as an increasingly large part of the mix.

In the United States, 20% of aging coal generation capacity is likely to be retired by 2015, which should provide an opening for renewables in addition to shale gas. The new EPA regulations on coal plants, due in summer 2013, could boost the renewables market if stringent enough. Much will also depend on whether the White House can work with Congress to further stimulate the market conditions that would deliver the president's stated goal of doubling generation from wind, solar, and geothermal power by 2020.

Clean energy markets are also picking up in Latin America, Asia, and Africa, making the sector truly global. Wind, solar and hydro power are making headway in Latin America, large scale solar programs are in the pipeline in the Middle East, and activity in Asia is spreading beyond China, with much solar power activity in India in particular. In Africa, solar, wind and geothermal plants are now getting financed and built. This globalization of renewable energy technologies is creating tremendous opportunities for our portfolio companies.

Net Assets

Leaf's Board of Directors approved these condensed interim financial statements on 15 March 2013. During the interim period ending 31 December 2012, Leaf's net asset value (NAV) per share increased by 1.0 per cent, from 141.52 cents (90.23 pence) to 142.97 cents (88.35 pence). Of our US$184.1 million of net assets, US$27.5 million was held in cash and US$156.8 million is invested in portfolio companies. The Board believes that the cash balances provide sufficient liquidity to meet the needs of the portfolio.

 (1) Based on US/GBP exchange rate of 1.6181 on 31 December 2012

MANAGEMENT REPORT

Overview

The clean energy sector remains in delicate health. The second half of 2012 saw continuing poor market conditions, due to a combination of factors described in the Market Environment section. Overall, 2012 saw an 11% decline in global investment in clean energy from its 2011 level. However, there were encouraging signs late in the interim period that clean energy markets may have seen the worst of bad investor sentiment and are now on a path to recovery.

Several indicators make the board and management of Leaf cautiously optimistic that investor confidence in the clean energy sector may be slowly returning. Q4 2012 global clean energy investment was 20% higher than the rather anaemic Q3 and flat with the same quarter of 2011 and 2010. By 31 December 2012, the WilderHill New Energy Global Innovation Index (NEX) had nearly recovered to where it began the year after falling 19% to its 25 July 2012 low, and continued to build upon these gains during early 2013. Given these market factors, we have continued to focus on providing operating and financial support to our investee companies to ensure that their potential is optimised and that they are strongly positioned for eventual realisations as market conditions improve.

As previously reported in our 2012 annual report, Leaf's efforts during the prior fiscal year to identify new, high-quality investment opportunities resulted in one new investment for Leaf. On 20 July 2012 Leaf invested in the preferred stock offering of Lehigh Technologies, Inc. We also made additional investments in several current investee companies. In summary:

·; On 20 July 2012 Leaf made a US$5 million investment in preferred stock of Lehigh.

·; Leaf made an additional US$11.9 million of direct equity and debt investments in existing portfolio businesses.

·; The Company earned US$0.6 million of interest income from debt investments in the portfolio companies.

Financial Performance

Leaf's total Net Asset Value (NAV) on 31 December 2012 was US$184.1 million, US$1.8 million higher than on 30 June 2012. This change resulted from the US$1.86 million comprehensive gain for the period, which consisted primarily of a US$4.0 million gain on revaluation in the carrying value of the portfolio companies, and US$0.6 million of interest income on loans to portfolio companies, less US$2.7 million of administration expenses. At the end of the period, US$27.5 million of the Company's NAV was held in cash and US$156.8 million in investments.

NAV per share for the Leaf portfolio was 142.97 cents or 88.35 pence at US$1.6181 to the GBP1. This was an increase of 1.0% for the six-month period from 30 June 2012. The increase was primarily due to the unrealized gain on revaluation of investments (+2.6%), offset by administration expense (-1.5%).

Key performance milestones passed by Leaf and its portfolio companies during the interim report period included the following:

·; SkyFuel, Inc., the utility scale solar thermal power solution company, was awarded a contract to supply high performance parabolic trough solar collectors to the City of Medicine Hat in Alberta, Canada. This will be the first concentrating solar power (CSP) project to be built in Canada. SkyFuel's collectors will offset fuel consumption at the City's combined cycle gas power plant. Hybrid applications such as the one at Medicine Hat provide an immediate and immense opportunity to cut carbon dioxide emissions from existing power generation facilities. This 1.1 megawatt rated solar project will offset natural gas consumption and will avoid 600 metric tons equivalent of carbon dioxide emissions per year. Estimates of the potential demand for integration of CSP into existing hybrid plants in North America exceed 20 gigawatts.

·; MaxWest Environmental Systems, Inc. (MaxWest), the leader in biogasification systems in the wastewater sector, announced the appointment of independent board member and interim CEO, Steven D. Winchester, as its new chief executive officer. Under his leadership, MaxWest reached mechanical completion and successful start-up of its second-generation gasification technology, which employs a proprietary gasifier with an integrated energy recovery process. The enhanced system configuration increases throughput and achieves higher energy conversion rates, providing further benefits to customers in the form of improved energy generation, increased reliability and reduced operating costs.

·; Lehigh, the green materials company and newest investment in the Leaf portfolio, announced several favourable developments during the period. In particular, it announced partnerships with HERA Holding, a Spanish waste-to-resource company and Andes Chemical Corporation, a provider of specialty chemicals and logistics solutions. Working with these partners will accelerate Lehigh's expansion into the tire, industrial rubber, and plastics industries in Europe, and Latin America, respectively, and will bolster Lehigh's ability to meet growing global demand for its micronized rubber powder (MRP).

In addition, the U.S. National Center for Asphalt Technology (NCAT) released a study highlighting the opportunity for Lehigh's MRP products to be used widely as a sustainable material for highway construction.

·; Invenergy Wind LLC (Invenergy), the large scale renewable generation company, closed a US$500 million investment by Caisse de dépôt et placement du Québec ("CDPQ") in a portfolio of approximately 1,500 megawatts of operating wind farms in the United States and Canada that are owned by Invenergy. Invenergy has now developed and put into service 35 wind farms in the US, Canada and Europe totalling over 3,300 megawatts.

·; Energía Escalona, the hydroelectric project developer based in Mexico City, completed a corporate restructuring that eliminated all the company's existing debt. The company also made favourable progress in the development of its flagship project, a 12 megawatt, run-of-river hydroelectric facility located in Veracruz, Mexico. Power markets in Mexico continue to be robust with growth in both power and capacity prices.

Market Environment and Outlook

According to Bloomberg New Energy Finance (BNEF), global clean energy investment by venture capital ("VC") and private equity ("PE") firms suffered its first annual decline in at least eight years in 2012. Investment in clean energy shrank to US$5.8 billion during the second half of calendar 2012, a 23% decline from the first half and the lowest level since 2006. It appears that many of the most risk-averse investors quit the sector last year, as continued pricing pressure in the public markets and the anaemic market for mergers and acquisitions reduced the near term prospect for profitable exits.

Factors contributing to the overall 11% drop over calendar year 2011 were the same as those discussed in Leaf's 2012 annual report, including:

- Global macroeconomic problems stemming from the subprime mortgage crisis in the United States and the sovereign debt crisis in Europe and corresponding political developments

- The recent, rapid proliferation of abundant and low-cost shale gas, leading to low U.S. power prices

- Global over-capacity and fierce competition in the solar PV segment, particularly from Asian manufacturers, some of whom have been accused by U.S. and European players of pricing below cost.

- U.S. and European policy uncertainty and depressed pricing for quoted clean energy stocks.

These adverse factors continued to dampen policy as well as investor support for clean energy in Europe and the U.S. during the reporting period. Their respective financial crises placed these governments under considerable fiscal pressure, resulting in the abandonment or curtailing of renewable energy subsidies. In the United States, the clean energy industry has also had to cope with the impact of newly abundant shale gas, which led to sharply lowered power prices. This has made it more difficult for many renewable energy sources and technologies to compete without government subsidies. At the same time dramatic price decreases in solar PV panels resulting from global competition and over-capacity continues to drive accelerated use of solar PV, undercutting the argument that government policy support is needed to increase solar adoption.

Looking ahead, however, the market appears to be turning a corner. As described above, global clean energy investment recovered in Q4 2012. Also, while prices of quoted renewable energy companies underperformed the broader public market in calendar year 2012, this performance took the shape of a "V" curve, with the NEX index first falling more than 19% to its low point on 25 July 2012, only to rally late and finish down by 5.5% on the year. The NEX has continued to rally since 31 December 2012, and in another hopeful sign SolarCity launched a successful Q4 IPO.

In the United States, the political and economic climate also appears to be moving in favour of renewed clean energy investment. President Obama has clearly signalled that addressing climate change and promoting clean energy is high on his second-term agenda.

Specifically, he has called for the U.S. Congress to set a national clean energy standard, and to promote "market-based solutions" to climate change, resulting in a doubling of renewable generation from wind, solar and geothermal by 2020. Whether the political will exists to pass energy legislation, particularly a clean energy standard, is questionable. However, the president does not require Congressional approval to use the U.S. Environmental Protection Agency's (EPA) powers under the Clean Air Act to regulate carbon dioxide emissions by imposing carbon limits on existing coal-power plants. Such regulation is expected by summer 2013 and could significantly boost the U.S. renewables market, depending on how strict the new rules are.

In an encouraging sign that the US Government is willing to promote clean energy, Congress approved a one-year extension of the production tax credit (PTC) for wind generation in December 2012, and expanded it to include projects that begin construction in 2013. Late last year the State of California also launched a cap-and-trade market for carbon dioxide, holding its first auction of carbon allowances. That it did so despite a vocal opposition concerned about the impact on the state's weak economy is a further encouraging signal for the clean energy market.

Company Outlook

Leaf's board and management believe that the diversity and balance of the Leaf portfolio, together with Leaf's focus on adding value to existing investee companies, sets the company up well to benefit as the clean energy markets improve. Our goal remains positioning our investee companies for eventual realisation in order to provide a competitive long-term return to Leaf's shareholders.

15 March 2013

INDEPENDENT REVIEW REPORT TO LEAF CLEAN ENERGY COMPANY

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Leaf Clean Energy Company (the "Company"), which comprise the condensed consolidated statement of financial position as of 31 December 2012, the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six month period then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim condensed consolidated financial statements.

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The Directors are responsible for the preparation and fair presentation of the interim condensed consolidated financial statements in accordance with IAS 34, 'Interim Financial Reporting' and the AIM Rules.

Our responsibility

Our responsibility is to express a conclusion on the interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion in respect of condensed consolidated financial statements

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements as of and for the six month period ended 31 December 2012 are not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting' and the AIM Rules.

KPMG

Century Yard, Cricket Square

Grand Cayman, KY1-1106

Cayman Islands

15 March 2013

Condensed consolidated statement of comprehensive income

for the six months ended 31 December 2012

The accompanying notes form an integral part of these interim financial statements.

Condensed consolidated statement of financial position

as at 31 December 2012

The accompanying notes form an integral part of these interim financial statements.

The financial statements were approved by the Board of Directors on 15 March 2013 and signed on their behalf by:

Condensed consolidated statements of changes in equity

for the six months ended 31 December 2012

The accompanying notes form an integral part of these interim financial statements.

Condensed consolidated statement of cash flows

For the six months ended 31 December 2012

Condensed consolidated statement of cash flows

for the six months ended 31 December 2012

The accompanying notes form an integral part of these interim financial statement

Notes to the consolidated financial statements

for the six months ended 31 December 2012

1 The Company

Leaf Clean Energy Company ("Leaf" or the "Company") was incorporated and registered in the Cayman Islands on 14 May 2007. The Company was established to invest in clean energy projects, predominantly in North America. Clean energy includes activities such as the production of alternative fuels, renewable power generation and the use of technologies to reduce the environmental impact of traditional energy. The Company seeks to achieve long term capital appreciation primarily through making privately negotiated acquisitions of interest (principally equity but also equity-related and subordinated or mezzanine debt securities) in both projects and companies which own assets or which participate in the clean energy sector and through the generation and commercialisation of carbon credits derived from these projects.

The Shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ("AIM") on 28 June 2007 when dealings also commenced.

The Company's agents and the management teamperform all significant functions. Accordingly, the Company itself has no employees.

The consolidated financial statements of the Company as at and for the year ended 30 June 2012 are available upon request from the Company's registered office at PO Box 309, Ugland House, George Town, Grand Cayman KY1-1104, Cayman Islands or at www.leafcleanenergy.com.

2 Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended 30 June 2012.

Leaf is an investment company. In previous periods, because it holds majority stakes in certain portfolio entities and therefore has the power to control, it was required to prepare group financial statements that consolidated the results of such investments. In order to present information that was comparable with other investment companies, Leaf also published financial statements of the Company, which included investments in subsidiaries regarded as part of the Company's investing business at fair value.

The Company has early adopted the amendments to IFRS 10: Investment Entities (issued October 2012) along with the consolidation suite of standards, namely: IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (revised) and IAS 28 (revised). The amendments to IFRS 10 require investment entities to measure controlled portfolio entities at fair value under IAS 39 instead of consolidating such subsidiaries. The comparative figures have been restated to comply with the new accounting policy. As a result of this change, the consolidated net asset value previously reported as at 30 June 2012 has been restated from US$173,984,000 to US$182,199,000.

The Company reports in accordance with IFRS as adopted by the EU, as required by the AIM rules. The amendments to IFRS 10 have not yet been endorsed by the EU. However, the Company has received a derogation from AIM to enable it to early adopt the amendments.

These interim condensed consolidated financial statements were approved by the Board of Directors on 15 March 2013.

3 Significant accounting policies

Save as for explained above, the accounting policies applied by the Company in these interim condensed consolidated financial statements are the same as those applied by the Company in its consolidated financial statements as at and for the year ended 30 June 2012.

4 Use of estimates and judgements

The preparation of interim condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June 2012.

The key estimate included in the financial statements is the valuation of unquoted investments (see note 10);

5 Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 30 June 2012.

6 Other administration expenses

7 Restricted cash

Restricted cash balance consists primarily of restricted cash collateral accounts securing two letters of credit with HSBC USA totalling US$3,171,457 in aggregate, which are in relation to one of the Company's investments. Both letters of credit are expected to be released on or before November 30, 2014, at which time Leaf expects the restrictions on the corresponding cash collateral accounts to be released and the cash in the account to be made available to Leaf again on an unrestricted basis.

8 Directors' remuneration

Details of the Directors' basic annual remuneration are as follows:

Directors' fees and expenses payable during the six month ended 31 December 2012 were:

The Directors are also entitled to receive reimbursement of any expenses in relation to their appointment. Total fees and expenses payable to the Directors for the six months ended 31 December 2012amounted to US$618,248 (period ended 31 December 2011: US$716,338) of which US$377,656 was outstanding at 31 December 2012 (December 2011: US$nil). The Directors engaged Mercer Limited to review Leaf's remuneration for its Directors as compared to companies similar to Leaf in the United States and the United Kingdom. 

9 Income/(loss) per share

Basic and Diluted

Basic and diluted income/(loss) per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the period:

There is no difference between the basic and diluted earnings/(loss) per share for the period.

10 Investments

Investments comprise ordinary stock, loans and preferred stock carrying a cumulative preferred dividend, preferential return of capital and capped rights to share in profits. The Directors, with advice from the in-house management team, Leaf Clean Energy USA, LLC, have reviewed the carrying value of each investment and calculated the aggregate value of the Company's portfolio. Investments are measured at the Directors' estimate of fair value at the reporting date, in accordance with IAS 39 'Financial Instruments: Recognition and measurement'.

10.1 Investments at fair value through profit or loss

Investments are stated at fair value through profit or loss on initial recognition. Loans are reviewed for impairment in conjunction with the related equity investment in the investee company. All investee companies are unquoted.

10.2 Portfolio valuation methodology

Unquoted investments are valued by applying an appropriate valuation technique, which makes maximum use of market-based information, is consistent with models generally used by market participants and is applied consistently from period to period, except where a change would result in a better estimation of fair value. The Company primarily invests in unquoted direct investments. Unquoted direct investments have characteristics similar to private equity investments, in that the value is generally determined through the sale or flotation of the entire business, rather than the sale of an individual instrument. Valuations of such investments are based upon the "International Private Equity and Venture Capital Valuation Guidelines."

The in-house management team conducted a valuation analysis of the Company's investment portfolio based upon standard valuation approaches compatible with the "International Private Equity and Venture Capital Valuation Guidelines." Given the uncertainties inherent in estimating the fair value of unquoted direct investments, a degree of caution was applied by the in-house management team in exercising judgements and making the necessary estimates.

10.3 The subsidiaries 

Since incorporation, for efficient portfolio management purposes, the Company has established the following subsidiary companies:

*Indirect subsidiaries

The Company also has control over the following underlying investee companies but these companies have not been consolidated on the basis of the early adoption of the amendments to IFRS 10.

 (1) Voting rights 81.9%

(2) Voting rights 66.25%

11 Share capital

12 Subsequent Events

There have been no subsequent events.